Keeping It Simple

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Dividend Stocks Under $5 Yielding Up to 16%
Robert Holmes

BOSTON (TheStreet) -- Investors bruised by the stock-market downturn have turned to dividend-paying shares for safety and stability. That usually means the Dow Jones Industrial Average is the beneficiary.

Still, several under-$5 companies such as Chimera Investment (CIM) offer fast growth as well as outsized dividend yields to those willing to take on greater risk.

Dividend stocks are attractive during times of uncertainty because of the consistent cash payout, and the fundamental belief that companies with large dividends are more prudent. While share prices can move erratically, as the market has during the violence and unrest in the Middle East, dividends typically hold steady. Since Feb. 18, the S&P 500 has dropped 3% and is now below its 50-day moving average, which is a negative technical indicator. The environmental disaster in Japan, the world's second-largest economy, may also cast a pall on global growth and investing.

Some companies, such as Dow members Chevron(CVX), Coca-Cola(KO) and Verizon(VZ), offer steady returns through dividends.

But for several stocks trading under $5, the dividend yield -- and risk -- are much higher. For long-term investors, the recent pullback has afforded a lower entry point in several high-yielding dividend stocks that trade for less than $5, including Chimera, Universal Insurance Holdings(UVE) and Primedia(PRM).

TheStreet narrowed the vast number of dividend-paying under-$5 stocks to those with the largest annual yield, detailed on the following pages.


China Nepstar Chain Drugstore(NPD)

Company Profile: China Nepstar Chain Drugstore operates retail drugstores in the People's Republic of China. Shares are up nearly 10% this year but have fallen more than 40% in the past 12 months.

Annual Dividend: 26 cents

Dividend Yield: 6.2% (forward annual)

First Carolina Investors(FCAR)

Company Profile: First Carolina Investors was formerly a real estate investment trust (REIT), but the company now operates as a closed-end, non-diversified management investment company.

The stock, which trades on the OTC Bulletin Board, has lost nearly half its value this year after the company's board of directors asked First Carolina's management to contact outside counsel as the board considers a proposal exploring the options of winding down and liquidating the company. However, shareholders would first need to approve a proposal before any final action would be taken.

Annual Dividend: 40 cents

Dividend Yield: 8% (forward annual)


Star Bulk Carriers(SBLK)

Company Profile: Star Bulk Carriers provides worldwide transportation of drybulk commodities, including iron ore, coal, grain, cement and fertilizer. Shares are down 6.7% this year and nearly 14% over the past 12 months.

Annual Dividend: 20 cents

Dividend Yield: 8.2% (forward annual)

American Church Mortgage(ACMC)

Company Profile: American Church Mortgage is a real estate investment trust (REIT) that makes mortgage loans to churches and other non-profit religious organizations in the U.S. The stock, which trades on the Pink Sheets, has rallied 72% in the past year and nearly 40% this year alone.

Annual Dividend: 40 cents

Dividend Yield: 8.6% (forward annual)


DHT Holdings(DHT)

Company Profile: DHT Holdings operates a fleet of double-hull tankers. Shares of the company are up 12% in the past year but have slipped 1.7% this year after announcing an upsizing of a common stock offering.

Annual Dividend: 40 cents

Dividend Yield: 9% (forward annual)

Tasty Baking(TSTY)
Company Profile: Tasty Baking sells premium single-portion cakes, doughnuts and snack bars. Investors in Tasty Baking have been punished this year, as the stock has dropped 65%.

In January, the company said it was "experiencing extremely tight liquidity," and that it would explore various financial and strategic actions. However, Tasty Baking also entered into an amendment to a credit agreement, which prohibits the payment of dividends for the time being.

Annual Dividend: 20 cents

Dividend Yield: 9% (forward annual)


HiMax Technologies(HIMX)

Company Profile: HiMax Technologies designs semiconductors that are components of flat-panel displays. Its main products are display drivers for large-sized TFT-LCD panels. Shares are up 3.8% this year but have fallen nearly 20% over the past 12 months.

Annual Dividend: 24 cents

Dividend Yield: 9.6% (forward annual)

Mind C.T.I.(MNDO)

Company Profile: Mind C.T.I. makes real-time and off-line billing and customer software for communications providers. The stock has been a high-flyer, rallying 83% over the past 12 months and more than 25% this year.

Annual Dividend: 32 cents

Dividend Yield: 10.2% (forward annual)


Bimini Capital Management(BMNM)

Company Profile: Bimini Capital Management is a real estate investment trust (REIT) that invests in mortgage-backed securities. The stock, which trades on the OTC Bulletin Board, is down 22% in the past year but is up 16.5% this year.

Annual Dividend: 13 cents

Dividend Yield: 15.2% (forward annual)

Chimera Investment(CIM)
Company Profile: Chimera Investment is a specialty finance company that invests in residential mortgage-backed securities (RMBS), residential mortgage loans and other real estate-related securities. Shares have climbed more than 2% this year and nearly 5% over the past 12 months.

Annual Dividend: 68 cents

Dividend Yield: 16.2% (forward annual)